Bank of Japan keeps policy rate steady while raising inflation forecast on Iran war worries
The central bank also sharply raised inflation forecasts and cut growth projections as three board members dissented for a hike to 1.0%.
- The Bank of Japan kept its policy rate steady at 0.75% on Tuesday, though three of its nine board members dissented, citing inflationary pressures from the Middle East conflict.
- Heightened inflation risks from the Iran war prompted the Bank to sharply revise its core inflation outlook to 2.8% from 1.9% while cutting its 2026 growth forecast to 0.5%.
- Board members Naoki Tamura, Junko Nakagawa, and Hajime Takata dissented in the 6-3 vote, arguing that Middle East tensions skewed price risks upward and warranted a 1.0% rate hike.
- Markets reacted as the yen rose and the Nikkei fell following the announcement, while Finance Minister Satsuki Katayama warned the government stands ready to intervene against excessive yen volatility.
- The Bank signaled a strong chance of rate hikes in coming months, and markets await Governor Kazuo Ueda's press conference for clues on how the Iran war affects its rate-hike strategy.
33 Articles
33 Articles
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The Bank of Japan on Tuesday kept its key interest rate unchanged at around 0.75 percent as it assesses the impact of the Middle East conflict, but sharply raised its inflation outlook for the current fiscal year, reinforcing expectations of a rate hike in the near future.
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